8 charged with price Gouging

labrea_gwNovember 9, 2012

I was thinking in light of the post on sending in the Guard to quell looting that there should also have been a send in some price checkers to prevent highway robbery also known as gasoline sales! NJ charged 8 with price gouging including a hotel. NY is also conducting an investigation!

"One gas station, a Lukoil station in Paterson, is accused of charging $5.50 per gallon for regular gasoline -- an increase of $2.05 per gallon, or 59%, above its pre-storm prices. The other stations are accused of price hikes of between 17% and 34%."

Well do away with consumer protection agencies at lest yes there were also reports of people on Craig's list charging $100 or more for a can of gas!
NYC is about to start rationing gas! The tax diver last night told me he had a hard time keeping his tank full & that he was paying more for it!

The market is amoral. It doesn't have feelings. If people are willing to pay $100 for 5 gallons of gasoline, then that is what it is worth and there is no reason to charge less.

That is, unless and until more people start selling 5 gallon cans of gas. Then they must compete with each other. Maybe a 2nd seller says "Hey, wait a minute. Don't buy his 5 gallons for $100; buy my 5 gallons at $90". As more sellers come into the pool, they will have to compete with each other and the price will go down.

Of course, these shortages are temporary so we don't have to wait for that to play out. Soon things will be back to normal and gougers will go away because they can't compete. For right now, they are sometimes the only game in some parts of town. The buyer can either pay the asking price or refuse to buy. The seller is taking the risk of purchasing the stuff and transporting it into unstable areas. No one else is bringing the goods, which is why they can get such usury prices.

Let's face it, though, this is a distorted market due to transient and unusual circumstances. Buyers can wait it out in hopes that normalcy returns to the local market soon, or they can fork over $100 for 5 gallons of gasoline. They have a choice; no one is holding a gun to their heads. It's $100 or wait for someone else to fix stuff and you can go buy your gasoline at normal prices.

If you need that gasoline for a generator, and electricity is the only way you can get sewage out of your house, it might well be worth the temporary price to carry you through until power is restored.

Where the concept breaks down is that to the victim there is no difference between the gouger holding a gun and the hurricane disrupting the normal supply. The gouger is still exploiting the victim, who is either obliged to pay their price or go without fuel. That is not a freedom of choice situation, like driving to the mall and choosing among stores.

More putting of the onus on the consumer, instead of the vendor - who is taking advantage of the consumer, big time.

And yet, gouging in the aftermath of a disaster is pretty widely considered to be amoral, even though it pure free market, in fact it's classic free market ideology.

Why is that? Why is the free market concept fine when it comes to having Africans or Asian or South Americans (brown people, shall we say?) dis-possessed, dis-placed, and sometimes mass-murdered, but try to sell high to some North Americans who have had the misjudgment to be in the wrong place at the wrong time and suddenly it's all wrong and whatnot.....

And then the smart guys stockpile a few hundred gallons of gas in old gallon milk jugs in their garage for the next time.

What could possibly go wrong?

I think the reason that price gouging is considered immoral is when it comes to necessities like food. Can't afford my inflated prices? Tough luck.

I dunno if that extends to gasoline for generators.

I lived for two years in the Niger Delta in Nigeria, the power came on for two weeks in two years. The joke was that the National Anthem was the sound of private generators running black market gasoline.

Speaking of stockpiling, I'm amazed at how many people don't fill up all their vehicles and gas cans and/or don't buy additional gas cans, them fill them up when they've been warned Mother Nature is about to open a can of whoop a$$.

"Where the concept breaks down is that to the victim there is no difference between the gouger holding a gun and the hurricane disrupting the normal supply. The gouger is still exploiting the victim, who is either obliged to pay their price or go without fuel. That is not a freedom of choice situation, like driving to the mall and choosing among stores."

I disagree. If you eliminate the gougers then you eliminate the gasoline and the choice to buy it, even to those who would voluntarily purchase it. If someone is willing to pay that kind of money under unusual circumstances, who are we to stop them and remove their choice?

If you have a job and get paid by the hour, it might be worth it to pay that $100 than lose a day's wages or perhaps even be fired.

There are no victims here; only buyers and sellers. No one is being forced to buy. The only difference is that the gougers are able to deliver gasoline, while local businesses and government are unable to deliver this commodity. No one would buy gasoline at this price if it was available at a lower price.

"I'm amazed at how many people don't fill up all their vehicles and gas cans and/or don't buy additional gas cans, them fill them up when they've been warned Mother Nature is about to open a can of whoop a$$."

I would also recommend going to the bank or ATM to get cash beforehand if there is any chance of widespread power outages for a long period of time. Cash is king when resources are scarce and the power is out.

Cash is king until it looks like the disaster won't have a discrete end to it.

I agree, petroleum products are the best bargain in history. I've been saying so on this forum since the beginning. Gasoline would be a good buy at 20 dollars the gallon, if you were to choose between a chain saw and a handsaw to get your wood in. Or maybe we'd like to take the time to grow corn and distill fuel from it?

Those people in the Rockaways should be grateful somebody wanted to sell it for $100 bucks per five gallons, with the can thrown in for free. After all, that sharpie had the good planning to not have their car get drowned in the Rockaways, so they could go buy cans and fill them with gas upstate and drive it in. That's the kind of get-up-and-go that built this country, right? Staying just out of the way of huge storms, but close enough to profit.

"And then the smart guys stockpile a few hundred gallons of gas in old gallon milk jugs in their garage for the next time.

What could possibly go wrong?

Imagine what can go wrong with 1000's of scenes like this going on.

If I know that there will continue to be a free market in gasoline in future disasters like Sandy, then I'm much less likely to be storing gasoline in old milk jugs in my garage.

There's a lot of NYC "weekenders" in this part of the country. I've been imagining that anyone who made it up here this weekend is going to be packing that five gallon container of gasoline that they keep for the lawn mower into the trunk of the car for the trip home.

I wouldn't feel comfortable driving the roads into NYC with a hundred gallons of gasoline in the back seat, but I did hear on NPR the other night about some New Englanders who had gotten hold of a couple of 55 gallon drums and were hauling gasoline into NYC. I'd feel better driving the roads knowing that professionals were doing the gasoline hauling.

Oh for criminy's sake... when the chips are down, and people are suffering, is exactly when a little bit of compassion should be shown... not the glint of greed in the eyes of anyone low enough to take advantage of their fellow human beings.

Capitalism is okay when ethics are maintained. Otherwise, it's an evil monster with only one goal, humanity be damned.

See, that's just it. By their classic definitions, the two are mutually exclusive. Without constant control by government, Capitalism would have broken society long ago. It just happens that greed (the force behind Capitalism) is a better motivator of an economy than envy (the force behind Communism). Unfettered envy will collapse an economy in weeks, whilst it can take years for unfettered greed to concentrate so much into so few hands that people give up working.

Posted by labrea 7NYC (My Page) on Fri, Nov 2, 12 at 12:50
Gov Chrstie is sounding like a damn socialist claiming he will crack down on free market forces also known as price gouging. Should a market any market have morals or operate in a moral free environment of supply & demand. Oh don't get your bowels in an uproar supply & demand is never about good & bad right or wrong or any moral ethic other than supply or demand.
Our pizza place was open good thing for coal ovens but they didn't
change the price of a pie still $20 as of yesterday. The stationary store was selling tiny LED flashlights out on the sidewalk maybe a dollar more than they usually are. I did here from some folks of $20 bottled water or $35 for a flashlight. OK .
The Wall Street Journal has an article called hug a gouger today I can read it but cant get this computer to link it How fee are the free marketers on this forum.
The neighbors sent me out with their cellphones I'm charging them in a pure communist fashion at NYU. Using a power strip given to me by someone who had an extra power strip but was unable to make it down the stairs she's too old! The university is providing the community with access to wifi & plugs and a patchwork of power strips sprawls around the floor!
NYU is home to to economist Paul Romer & Nouriel Roubini be interesting little exercise in ,,,"

That was last week now to be contrary how do people feel about extreme sales. Pizza wars where the owners of a store put their employees in peril by slashing prices lower & lower & lower in deflationary fashion!
Playing a game of chicken how low can you go & survive!

Again without a large group of consumers that could be dangerous for both.

"In the amped-up war of commerce and 75-cent pizza on the Avenue of the Americas in Midtown, a perilous moment is approaching. Circumstances suggest that ravenous New Yorkers might soon witness 50-cent pizza, 25-cent pizza or, yes, free pizza.
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Hiroko Masuike/The New York Times
How low can they go in the price war on Avenue of the Americas between 37th and 38th? “We might go to free pizza soon,” one combatant said.
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Hiroko Masuike/The New York Times
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Hiroko Masuike/The New York Times
Mohit Mitra, in white hat, served a customer at Bombay Fast Food/6 Ave. Pizza on Avenue of the Americas. One customer said, “We need 75-cent hamburgers next.”
It is that caustic. Neither side is willing to yield an inch ��" or a cent. Escalation seems imminent.

As so often happens in twisty New York stories involving wallets and food choices, who is being picked on and who is attacking vary in the telling. Convenient facts get omitted from the narrative.

It’s best to start at $1.50 a slice.

That is what pizza was selling for about a year ago at a family business that is a combination vegetarian Indian restaurant, candy store and pizza parlor on Avenue of the Americas (also known as Sixth Avenue), between 37th and 38th Streets. It is called Bombay Fast Food/6 Ave. Pizza.

Then a Joey Pepperoni’s Pizza opened near the corner of 39th and Avenue of the Americas, offering pizza for $1, a price that has in recent years been favored by a number of New York pizza establishments.

So Bombay/6 Ave. Pizza shrank its price to $1 too.

All was good until last October, when a third player entered the drama.

A 2 Bros. Pizza, part of an enlarging New York chain of 11 shops that sell slices for a dollar, opened virtually next door to Bombay/6 Ave. Pizza. The only separation is a stairwell that leads up to a barbershop and hair salon.

Price stability at a buck all around persisted until eight days ago, when both 2 Bros. and Bombay/6 Ave. Pizza began selling pizza for the eye-catching price of 75 cents a slice, tax included ��" three slender quarters.

(This alone was not a milestone. The Ray’s Pizza on Broadway between 54th and 55th introduced a 75-cent slice for a limited time in January of last year. Slices are now 99 cents, plus tax: $1.08.)

The primary owner of Bombay/6 Ave. Pizza is Ramanlal Patel, 68, who also has a few businesses in Atlanta and holds property in India.

His nephew, Bravin Patel, 45, oversees the establishment. He and his manager, Mohid Kumar, 49, were there the other day griping about 75-cent pizza.

“I’m thinking, God help me,” Mr. Patel said.

They said that 2 Bros. was trying to drive them out of business, that 2 Bros., unprovoked, slashed the price to 75 cents, forcing them to follow, that things were miserable, that Ramanlal Patel has serious kidney problems, that property in India had to be sold to keep the place going.

Mr. Kumar said he was contemplating checking with a lawyer to see if there might be a city law that somehow prohibits a business from selling pizza at outlandishly cheap prices.

But as is so often the case in battles like these, the other side told a slightly different story.

At the St. Marks Place office of 2 Bros., its owners, the Halali brothers Eli, 29, and Oren, 27, identified the true aggressor as Bombay/6 Ave. Pizza.

Here’s how they described it:

On Thursday evening a week ago, Bombay/6 Ave. ��" unprovoked, and without warning ��" cut its pizza price to 79 cents. The next morning, 2 Bros. retaliated by moving to 75 cents (its owners felt it was easier to make change from a dollar than at 79 cents). Bombay/6 Ave. matched the 75 cents, and that’s where everything sits.

“We don’t sell pizza at 75 cents,” Eli Halali said. “But if they think they’re going to sit next to us and sell at 75 cents, they’ve got another think coming.”

Could they prove it? At this point, it was just one pizza seller’s word versus another’s.

But 2 Bros. has a security camera. Winding back to the night in question, the night of the sudden 21-cent price drop, a manager found frames that showed the front of the two stores. And there it was: Bombay/6 Ave. Pizza’s 79-cent sign when 2 Bros. was at $1. Mr. Patel and Mr. Kumar had made the first move.

When they were apprised of this information, they said they did not realize there had been interest in talking about 79-cent pizza.

For his part, Eli Halali made it clear that 75 cents was a temporary price point. He said he could not make money at that level and eventually would return to $1. He said that if Bombay/6 Ave. Pizza went back to $1, he would as well.

If it didn’t, he said, it better watch out.

His father, Joshua Halali, who acts as a consultant to 2 Bros., said, “I suggested to my children to go to 50 cents.”

Oren Halali said, “We might go to free pizza soon.”

Eli said: “We have enough power to wait them out. They’re not going to make a fool of us.”

The brothers said they are also contemplating adding fried chicken to the Avenue of the Americas store to intensify the pressure on Bombay/6 Ave. Pizza.

“We may go to 50 cents,” Mr. Kumar said. Of his next-door rival, he said: “I want to hit him. I want to beat him.”

They had added the name, Pizza King, to the sidewalk sign out front, hoping a regal nickname might do some good.

Related prices at both establishments have also tumbled. The special of two slices and a drink dropped to $2.25 from $2.75. An entire pie fell to $6 from $8 (actually to $5.99 at Bombay/6 Ave. Pizza).

A haircut at the barber located between them is $12. Better that you eat.

As for Joey Pepperoni’s, Met Zade, one of the owners, said: “I can tell you we’re absolutely not dropping our price. For $1 a slice, you can still make a profit. For $1, an owner can still sit down and eat. At 75 cents, you’d be a mouse on a wheel.”

While the pizza parlors insult one another, the eating public couldn’t be happier.

In times of shortages, you don't even have to set a price on many goods and services. People that know you have something in short supply, or high demand will make you an offer.

Cash is king. During disasters many service providers are so busy that you have to pay contractors/subs/helpers in cash and/or pay them large cash bonuses to do your job first, or cancel/delay other lower paying jobs.

Jeez, some need to take a course in economics. Cash is a widely-accepted IOU so long as certain key factors maintain stability in a society. Cash has value, today, in the storm-wracked areas only because the immediately surrounding economy and society, vastly larger, is unaffected. Otherwise it would have no value until normalcy recurred.

I don't recall which novel I read years ago, but it had a scene describing how in chaotic, war-torn countries, the desperate, starving folk would be selling gasoline alongside the road out of jerry cans and what not, and then along would come a bomber or artillery shell and set the whole place on fire.

In many parts of the world, the sign that somebody is selling black market gas is an empty bottle tied to a stick. You stop your car, and a few seconds later out of the brush comes a kid telling you what the price is and how much is available.

And thats how I got fuel for my generator. Be sure to pour it through a fine meshed filter.

In a dysfunctional market you need government intercession or the consumer is going to get gamed.

There was no "shortage"... only poor distribution which caused a cascade (panic)... Rationing (by govt edict) seems to have worked.

Today legislation was proposed that would require all gas stations in the metro ny area to have and maintain a generator both for safety as well as energy security during crises.... sounds reasonable since many stations had fuel but couldn't deliver it. And, I'm betting people around these parts are willing to pay whatever the extra cost is that will eventually be passed down to us. Why wait to get screwed during a crisis? Doing so is far more costly.

" When confronted with gas lines that were growing exponentially and reports of fuel terminals in disrepair, city and state officials who huddled with Gov. Andrew M. Cuomo on Sunday were unable to come to a decision to ration gas, as New Jersey had done the previous day.

Instead, these officials seemed to cross their fingers that somehow the gas supply would improve and that they would be able to avoid resurrecting unpleasant memories of the 1970s. Mr. Cuomo was said to be especially lukewarm, according to several people who were present at or were briefed on the discussion. Mayor Michael R. Bloomberg, these people also said, talked about odd-even rationing and also mused aloud in the Sunday meeting that perhaps the best option was to simply allow the free market to dictate how people would find gas.

But by Wednesday, there were renewed concerns that the gas crunch was not easing in the five boroughs and parts of Long Island even as it was in New Jersey and the suburbs north of the city. By the next day, officials in New York City and in Nassau and Suffolk Counties were ready to embrace rationing.

"The reaction on this side of the Hudson was slow, and New Yorkers have paid the price," said Anthony Michael Sabino, a lawyer who specializes in the oil and gas industry and lives in Nassau County. "The crisis became much worse because when people were left to their own devices, a panic set in." " ~NYTimes

Additionally, as a previously stated, this "shortage" seems to be a distribution issue. Local and state govt should have done and needs to do a better job of regulating the gasoline distribution industry at least here in the 5 boroughs and LI. It has been exposed as a cobbled together mess w/ little to no rhyme or reason.

LIPA. The folks that have come from elswhere to help LIPA do their job are telling stories about antiquated systems and equipment that they cannot believe is still in use in 2012... including 20yr old computers and dial-up modems. LIPA also had NO preparedness plan... Cuomo asked for one last year, they said "sure, no problem" and apparently didn't do anything. Maybe, since LIPA is the only game in town thanks to government they should be regulated by government?

Govt needs to have ongoing regulation of energy supply and distribution because it is a security issue in times of crises. Why wait for that?